Correlation Between COMMERCIAL VEHICLE and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both COMMERCIAL VEHICLE and Westinghouse Air at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining COMMERCIAL VEHICLE and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COMMERCIAL VEHICLE and Westinghouse Air Brake, you can compare the effects of market volatilities on COMMERCIAL VEHICLE and Westinghouse Air and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in COMMERCIAL VEHICLE with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMMERCIAL VEHICLE and Westinghouse Air.
Diversification Opportunities for COMMERCIAL VEHICLE and Westinghouse Air
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between COMMERCIAL and Westinghouse is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding COMMERCIAL VEHICLE and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake and COMMERCIAL VEHICLE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on COMMERCIAL VEHICLE are associated (or correlated) with Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of COMMERCIAL VEHICLE i.e., COMMERCIAL VEHICLE and Westinghouse Air go up and down completely randomly.
Pair Corralation between COMMERCIAL VEHICLE and Westinghouse Air
Assuming the 90 days trading horizon COMMERCIAL VEHICLE is expected to under-perform the Westinghouse Air. In addition to that, COMMERCIAL VEHICLE is 3.56 times more volatile than Westinghouse Air Brake. It trades about -0.07 of its total potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.2 per unit of volatility. If you would invest 17,591 in Westinghouse Air Brake on August 28, 2024 and sell it today you would earn a total of 1,444 from holding Westinghouse Air Brake or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COMMERCIAL VEHICLE vs. Westinghouse Air Brake
Performance |
| Timeline |
| COMMERCIAL VEHICLE |
| Westinghouse Air Brake |
COMMERCIAL VEHICLE and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COMMERCIAL VEHICLE and Westinghouse Air
The main advantage of trading using opposite COMMERCIAL VEHICLE and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMMERCIAL VEHICLE position performs unexpectedly, Westinghouse Air can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Westinghouse Air will offset losses from the drop in Westinghouse Air's long position.| COMMERCIAL VEHICLE vs. KENNAMETAL INC | COMMERCIAL VEHICLE vs. Evolution Mining Limited | COMMERCIAL VEHICLE vs. Harmony Gold Mining | COMMERCIAL VEHICLE vs. G III Apparel Group |
| Westinghouse Air vs. Datang International Power | Westinghouse Air vs. Datadog | Westinghouse Air vs. LION ONE METALS | Westinghouse Air vs. KENNAMETAL INC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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